Thursday, March 12, 2009

Not so terrible

So far, so good for the bear market rally. There were so many doubters out there boldly declaring that the were going to short the market Tuesday that the market had to go higher just to knock them down a few pegs. I wonder how that money manager on Fox Business during Tuesday's premarket is doing?

Oh, and guess which sector is right in there in the hunt? What if you guessed retail? You'd be right! And the MVR index actually kissed its 50-day average today. I'm not saying it is going through but the S&P 500 can't say the same thing, can it?

6 comments:

patrick neid said...

Two out of the last three trading days have been big 90% trading days, the old Lowry's benchmark for a two-three month rally phase following prior 90% down days.

I have no idea where I copied this but it's in my tech rules file:

"Past experience shows that 90% Down Days are typically followed by one of three patterns: (1) a 90%Up Day occurring quickly after the 90% Down Day would suggest that a sustained rally lasting about two or more months is likely; (2) the absence of a 90% Up Day during a snap-back rally would suggest that a brief recovery rally lasting 2 to 7 trading days would most likely be followed by new lows in price and additional 90% Down Days. Such rallies should be used to sell stocks; (3) the lack of any snap-back rally within a few days after the last 90% Down Day would suggest a sustained market decline is underway that will probably produce additional 90% Down Days.’”

Quick Takes Pro said...

Be careful with the 90% days as even Lowry's has said they are not working the way they used to work. Nothing is when the credit markets freeze up and government intervention trumps free market will.

But with that said, I'll still take it as a positive for the short-term.

patrick neid said...

So right. In fact in my email missives I send to old clients I led in with "in previous eras" this used to be good.

gingersue said...

Patrick, you have to be careful when quoting Lowry 90% days. That's 90% on volume AND POINTS. Two different categories. Getting the data on points is tough, and I've tried for many years. I've been a subscriber and I've read Lowry's winning entry in the MTA award back in 2002.

The 90% "points" gained or lost data is hard to figure out. although Lowry's says that you can get it with the data that is in the WSJ every day, but you have to do a little work. I've never been able to figure it out. Lowry's also adds up all the fractional point gains on stocks as well to get this number. If you, or anyone else, could get this, I would forever be in debt. I used to subsribe to Lowry's but the cost got too expensive.

patrick neid said...

Gingersue,

I have read the same paper from Feb 02 Identifying Bear Market Bottoms and had like yourself relied on a subscription at our firm years ago.

Their rules from the paper:
These four daily totals –
Upside Volume and Points Gained, Downside Volume and Points Lost – represent the basic
components of Demand and Supply and
panic selling in
which Downside Volume equaled 90.0% or more of the total of Upside Volume plus Downside
Volume, and Points Lost equaled 90.0% or more of the total of Points Gained plus Points Lost.

For myself I have found that if both the up/down volume and the AD line for day was 12-15 to one it usually qualified.

But on the larger point you are right I should not even mentioned here as it's my twist on their benchmark because I can't do the daily research to get an exact number.

That said Tuesday was nearly a 20 to 1 day. I would be shocked if it did not meet their criteria.

Amalan said...

Some sentiment indicators, though subjective, are also doing fine. It is said that for us to move into a bull market territory, we need to get past "convicting or punishing the people responsible for the damage" stage. Of course, this may not be a bull, but at least there is a strong chance that these lows may hold even if there is another retracement later. Madoff finally confessed officially. Cramer came clean too. In fact, in 2001-2002, I thought the bear wouldn't end until they take Cramer off the air, but he survived. At least this week, he was quite humiliated on TV. May be this is the lowest for the markets - it certainly was lower than the 2002 lows.